A

FINAL PROJECT
ON

A STUDY ON IPO ISSUE DOCUMENTS AND THEIR

PAST LISTING PERFORMANCE.
PROJECT SUBMITTED TO ARNI UNIVERSITY,
IN PARTIAL FULFILMENT OF THE REQUIREMENTS
FOR THE DEGREE OF MASTER IN BUSINESS MANAGEMENT
By

Name: - RAHUL CHOUDHARY

Registration No: - AEMB0011A/10
Name of the Guide: - Mr. ASHISH PARASHAR

ARNI UNIVERSITY, KATHGARH INDORA

Page No. 1

DECLARATION

I hereby declare that the project entitled A STUDY ON IPO ISSUE

DOCUMENTS AND THEIR PAST LISTING PERFORMANCE.
submitted for the Degree of Master In Business Administration is my original
work and the project has not formed the basis for the award of any degree,
diploma, associate ship, fellowship or similar other titles. It has not been
submitted to any other university or Institution for the award of any degree or
diploma.

Signature of the Candidate

Countersigned

Director/Dean/Coordinator

Page No. 2

Presentation In charge
(Faculty)

ACKNOWLEDGEMENT

It is with real pleasure that, I record my indebtedness to my project

Guide, Mr. Ashish Parashar for his counsel and guidance during the
preparation of this project.
I am grateful to Centre Head Mr. Praveen Mehta
I wish to record my sincere and special thanks to Mr. Amit Sharma,
My thanks are due to Mr. Manish Goyal and Mr. Bharat Kuldeep to
give me great and valuable support.

Page No. 3

TABLE OF CONTENT
Chapter:

Content:

Page No.

Acknowledgement

List of Tables

List of Diagrams

(1)

Introduction
1.1

07-34
Initial public offering (IPO)
7-19

What is IPO?

7-9

Reasons for Listing

10-12

IPO Market in India

13-14

IPO Allotment Status

14-15

IPO Procedure

15-19

1.2

Objectives and Role of IPO in India

20-21

1.3 Review of Literature

Advantages & Drawbacks of IPO

22-25
22-24

Example of Some Published Issues

25

1.4 Hypothesis

Page No. 4

26-33

Past/ Present/ Future of IPO

26-29

1.5

(2)

What are the Critical Areas to Focus

29-33

Limitations of the Study

33-34

Research Methodology

Source of Data

(3)

(4)

Other Source

35-37
35
36

Significance of the study

38-48

2.1 Global IPO Market

38-44

2.2

45-48

Upcoming IPO in The Market

Research and Analysis

48-64

3.1 Latest News in IPO Sector

48-50

3.2 Major Player of IPO in India

51-64

(5) Finding & Conclusion

Bibliography
Page No. 5

65-67
68-69

Page No. 6

Table No.
Page No.

Title of the Table

1.1.

Middle East Activity Table

1.2.

Industrial Distribution

48
50
1.3.

No.IPO of NSE in India

Table No.

Title of the Diagram

58

Page

No.

1.1.

Different Kind of Issue

11

1.2.

How To List An IPO

13

1.3.

IPO Process

1.4

Book Building Process

1.5

IPO Returns

15

23
40
1.6.

Global IPO Activity

44

1.7.

Global IPO Activity by Industry.

46

1.8.

Top Ten IPO in US

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51

Page No. 8

Page No. 9

1. 1 INITIAL PUBLIC OFFERING (IPO)

What is IPO?
Initial public offering (IPO), also referred
to simply as a "public offering", is when
a company issues common stock or
shares to the public for the first time.
They are often issued by smaller,
younger companies seeking capital to expand, but can also be done by large
privately-owned companies looking to become publicly traded. In an IPO, the
issuer may obtain the assistance of an underwriting firm, which helps it
determine what type of security to issue (common or preferred), best offering
price and time to bring it to market. Initial Public Offering (IPO) in India means
the selling of the shares of a company, for the first time, to the public in the
country's capital markets. This is done by giving to the public, shares that are
either owned by the promoters of the company or by issuing new shares. During
an Initial Public Offer (IPO) the shares are given to the public at a discount on
the intrinsic value of the shares and this is the reason that the investors buy
shares during the Initial Public Offering (IPO) in order to make profits for them
selves. IPO in India is done through various methods like book building
method, fixed price method, or a mixture of both. The method of book building
Page No. 10

has been introduced in the country in 1999 and it helps the company to find out
the demand and price of its shares. A merchant banker is nominated as a book
runner by the Issuer of the IPO. The company that is issuing the Initial Public
Offering (IPO) decides the number of shares that it will issue and also fixes the
price band of the shares. All these information are mentioned in the company's
red herring prospectus. During the company's Initial Public Offering (IPO) in
India, an electronic book is opened for at least five days. During this period of
time, bidding takes place which means that people who are interested in buying
the shares of the

Company makes an offer within the fixed price band. Once the book building is
closed then the issuer as well as the book runner of the Initial Public Offering
(IPO) evaluate the offers and then determine a fixed price. The offers for shares
that fall below the fixed price are rejected. The successful bidders are then
allotted the shares

Page No. 11

IPOs can be a risky investment. For the individual investor, it is tough to

predict what the stock or shares will do on its initial day of trading and in the
near future since there is often little historical data with which to analyze the
company. Also, most IPOs are of companies going through a transitory growth
period, and they are therefore subject to additional uncertainty regarding their
future value

REASONS FOR LISTING

When a company lists its shares on a public exchange, it will almost
invariably look to issue additional new shares in order to raise extra capital at
the same time. The money paid by investors for the newly-issued shares goes
directly to the company (in contrast to a later trade of shares on the exchange,
where the money passes between investors). An IPO, therefore, allows a
company to tap a wide pool of stock market investors to provide it with large
volumes of capital for future growth. The company is never required to repay
the capital, but instead the new shareholders have a right to future profits
distributed by the company and the right to a capital distribution in case of
dissolution.

Page No. 12

The existing shareholders will see their shareholdings diluted as a proportion of

the company's shares. However, they hope that the capital investment will make
their shareholdings more valuable in absolute terms.
In addition, once a company is listed, it will be able to issue further shares via a
rights issue, thereby again providing itself with capital for expansion without
incurring any debt. This regular ability to raise large amounts of capital from
the general market, rather than having to seek and negotiate with individual
investors, is a key incentive for many companies seeking to list.

Major Reason for Listing IPO

The increase in the capital: An IPO allows a company to raise funds for
utilizing in various corporate operational purposes like acquisitions,
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mergers, working capital, research and development, expanding plant and

equipment and marketing.

Liquidity: The shares once traded have an assigned market value and
can be resold. This is extremely helpful as the company provides the
employees with stock incentive packages and the investors are provided with
the option of trading their shares for a price.

Valuation: The public trading of the shares determines a value for the
company and sets a standard. This works in favor of the company as it is
helpful in case the company is looking for acquisition or merger. It also
provides the shareholders of the company with the present value of the
shares.

Increased wealth: The founders of the companies have an affinity

towards IPO as it can increase
without
case

dividing
of

Page No. 14

the

the wealth of the company,

authority

as

partnership.

in

 IPO MARKET IN INDIA

The IPO Market in India has been developing since the liberalization of the
Indian economy. It has become one of the foremost methods of raising funds for
various developmental projects of different companies.
The IPO Market in India is on the boom as more and more companies are
issuing equity shares in the capital market. With the introduction of the open
market economy, in the 1990s, the IPO Market went through its share of policy
changes, reforms and restructurings. One of the most important developments
was the disassembling of the Controller of Capital Issues (CCI) and the
introduction of the free pricing mechanism.
This step helped in developing the IPO Market in India, as the companies were
permitted to price the issues. The Free pricing mechanism permitted the
companies to raise funds from the primary market at competitive price.
The Central Government felt the need for a governed environment pertaining to
the Capital market, as few corporate houses were using the abolition of the
Controller of Capital Issues (CCI) in a negative manner. The Securities
Exchange Board of India (SEBI) was established in the year 1992 to regulate
the capital market. SEBI was given the authority of monitoring and regulating
the activities of the bankers to an issue, portfolio managers, stockbrokers, and
other intermediaries related to the stock markets. The effects of the changes are
Page No. 15

evident from the trend of the resources of the primary capital market which
includes rights issues, public issues, private placements and overseas issues.
The IPO Market in India experienced a boom in its activities in the year 1994.
In the year 1995 the growth of the Indian IPO market was 32 %.
The growth was halted with the South East Asian crisis.
The markets picked up speed again with the introduction of the software stocks.

IPO ALLOTMENT STATUS

Initial public offering is also popularly known as IPO, is the first time sale
of stocks, of a private company. A new company can launch IPO to raise capital
to initiate its business. Moreover, Initial Public Offering can also be launched to
raise money for expansion or other important operations of an existing
company. The sale of stock through such Initial Public Offering (IPO) is meant
for the individual and corporate investors. The aim of such issuance of Initial
Public Offering is to invest the accumulated corpus for, either opening -up of a
company or expansion of an existing company.
Thus, effectively, an Initial Public Offering pools investments and utilizes it in
building or expansion of the said company. The shares held by such investors
give them the rights of the company and to its future profits. The process which
involves determination of the issue size and type, offer price and best time of
introduction into the market is called "underwriting". The underwriting is
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generally done by the investment bankers. These underwriting firms or

investment bankers are allotted some specified numbers of shares to sell, which
is called as IPO Allotment Status.
In other words, IPO Allotment Status can also be defined as the number of
stocks which an investment banker is permitted to sell to the general investor
before the share is being traded on an exchange. The excess shares are then
allotted to other investment bankers which are eligible to sell such shares. In
India, the main governing body that determines such eligibility criteria and the
IPO Allotment Status is the Securities and Exchange Board of India (SEBI).

IPO - PROCEDURE
IPOs generally involve one or more investment banks as "underwriters."
The company offering its shares, called the "issuer," enters a contract with a
lead underwriter to sell its shares to the public. The underwriter then approaches
investors with offers to sell these shares.
The sale (that is, the allocation and pricing) of shares in an IPO may take
several forms. Common methods include:
Best efforts contract
Firm commitment contract
All-or-none contract
Bought deal
Page No. 17

 Dutch auction
Self-distribution of stock
A large IPO is usually underwritten by a "syndicate" of investment banks led by
one or more major investment banks (lead underwriter). Upon selling the
shares, the underwriters keep a commission based on a percentage of the value
of the shares sold. Usually, the lead underwriters, i.e. the underwriters selling
the largest proportions of the IPO, take the highest commissionsup to 8% in
some cases.
Multinational IPOs may have as many as three syndicates to deal with differing
legal requirements in both the issuer's domestic market and other regions. For
example, an issuer based in the E.U. may be represented by the main selling
syndicate in its domestic market, Europe, in addition to separate syndicates or
selling groups for US/Canada and for Asia. Usually, the lead underwriter in the
main selling group is also the lead bank in the other selling groups.
Because of the wide array of legal requirements, IPOs typically involve one or
more law firms with major practices in securities law, such as the Magic Circle
firms of London and the white shoe firms of New York City.
Usually, the offering will include the issuance of new shares, intended to raise
new capital, as well the secondary sale of existing shares. However, certain
regulatory restrictions and restrictions imposed by the lead underwriter are
often placed on the sale of existing shares.

Page No. 18

Public offerings are primarily sold to institutional investors, but some shares are
also allocated to the underwriters' retail investors. A broker selling shares of a
public offering to his clients is paid through a sales credit instead of a
commission. The client pays no commission to purchase the shares of a public
offering; the purchase price simply includes the built-in sales credit.
The issuer usually allows the underwriters an option to increase the size of the
offering by up to 15% under certain circumstance known as the green shoe or
over allotment option.
The first sale of stock by a private company to the public. IPOs are often issued
by smaller, younger companies seeking the capital to expand, but can also be
done by large privately owned companies looking to become publicly traded. In
an IPO, the issuer obtains the assistance of an underwriting firm, which helps it
determine what type of security to issue (common or preferred), the best
offering

MAJOR PROCESS OF AN IPO

Eligibility Criteria:

Net Tangible assets of Rs. 3.00 Crore in each of the preceding 3

years.

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Track record of Distributable profits at least 3 out of 5 preceding

years.

The Company has a Net worth of Rs. 1.00 Crore in preceding 3

years.

The proposed issue should not exceed 5 times of its Pre-issue

The process of an IPO - Eligibility criteria: (Alternate route)

Book building process and 50% of the offer to QIBs or

15% participation in project by F/Is or Schedule Banks;
10% of the Project cost from appraiser;
10% of the Issue to QIBs.
Minimum post issue face capital of Rs.10 Crores or
Market making for 2 years and Minimum number of allottees at least
1000

Official Process of IPO

Appointment of Brokers, Advertisers and Bankers

Conducting Road shows and Press Conference

Opening and closing of Subscription list

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Preparation of Basis of Allotment

Allotment of shares

Listing of shares

price and the time to bring it to market

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1.2 OBJECTIVES AND ROLE OF IPO

1. To get the knowledge of IPO.
2. To analyze the returns of IPOs which were issued in the 1st quarter of 2007.
3. To know the return of those IPOs for 1 month, 3 months, 6 months, and 1
year.
4. To know the market rate of return for the same period.
5. To know the procedure for calculating the Standard Deviation, calculating
Sharpes Ratio & the abnormal return.
5.1. Spread awareness about this process.
5.2. Find out the companies which like to adopt this technique.
5.3. Find out the factors which influence the IPO Listing Process.
5.4. What the companies are looking from Open New IPOs in India?
5.5. Analysis between Share Holder and IPO Companies
5.6. Analysis of IPOs post/present/future Prospects
5.7. Analysis of Auction, Pricing, Issued Price and Reverse IPOs.

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OBJECTS OF THE OFFERING NEW IPO

5.7.1. Funds Requirement
5.7.2. Funding Plan (Means of Finance)
5.7.3. Appraisal
5.7.4. Schedule of Implementation
5.7.5. Funds Deployed
5.7.6. Sources of Financing of Funds already deployed
5.7.7. Details of Balance Fund Requirement
5.7.8. Interim Use of Funds
5.7.9. Basic Terms of Issue
5.7.10. Basis for issue price
5.7.11. Tax Benefits

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1.3 Review of literature

ADVANTAGES & DRAWBACKS OF IPO
The Advantages of IPO are numerous. The companies are launching more
and more IPOs to raise funds which are utilized for undertakings various
projects including expansion plans. The Advantages of IPO is the primary
factor for the immense growth of the same in the last few years. The IPO or the
initial public offering is a term used to describe the first sale of the shares to the
public by any company. All types of companies with the idea of enhancing
growth launch IPOs to generate funds to cater the requirements of capital for
expansion, acquiring of capital instruments, undertaking new projects.

Major Advantages of IPO

IPO has a number of advantages. IPO helps the company to create a publi
c awareness about the company as these public offerings generate publicity by
inducing their products to various investors.

The increase in the capital: An IPO allows a company to raise funds for

utilizing in various corporate operational purposes like acquisitions, mergers,

working capital, research and development, expanding plant and equipment and
marketing.

Liquidity: The shares once traded have an assigned market value and

can be resold. This is extremely helpful as the company provides the employees
Page No. 24

with stock incentive packages and the investors are provided with the option of
trading their shares for a price.

Valuation: The public trading of the shares determines a value for the

company and sets a standard. This works in favor of the company as it is

helpful in case the company is looking for acquisition or merger. It also
provides the share holders of the company with the present value of the shares.

Increased wealth: The founders of the companies have an affinity

towards IPO as it can increase the wealth of the company, without dividing the
authority as in case of partnership.

Drawbacks of IPOs
It is true that IPO raises huge capital for the issuing company. But, in
order to launch an Initial Public Offering (IPO), it is also necessary to make
certain investments. Setting up an IPO does not always lead to an improvement
in the economic performance of the company. A continuing expenditure has to
be incurred after the setting up of an IPO by the parent company. A lot of
expenses have to be incurred in the form of legal fees, printing costs and
accounting fees, which are connected to the registering of an IPO. Such
expenses might cost hundreds of US dollars. Apart from such enormous costs,
there are other factors as well that should be taken into consideration by the
company while introducing an IPO.Such factors include the rules and
regulations involved to set up public offerings and this entire process on the
other hand involve a number of complexities which sometime require the
Page No. 25

services of experts in relevant fields. Some companies hire experts to do the

needful to ensure a hassle-free execution of the task. After the IPO is
introduced, the expenses become a routine in every activity involved. Besides,
the CEO of the company would have to spend a lot of time in handling the SEC
regulations or sometimes he hires experts to do the same. All these aspects, if
not handled with efficiency, prove to be some major drawbacks related to the
launch of IPOs.
The launch of IPO also brings about shareholders of the company. Shareholders
have ownership in the company. The primary owners of the company or the
people holding maximum authority in the company cannot take decisions all by
themselves once an IPO has been launched and shareholders have been formed.
The shareholders have an active participation in every decision that is being
taken even if they do not hold 50 percent share of the company. They have their
individual demands to be met as they own a certain percentage of stakes in the
company. The SEC regulations require notifications from the shareholders of
the company, meetings, and also approvals from them while making important
business decisions. A major risk with shareholders is that, they can sell off their
stocks any time they want, in case they see the price band of the stakes of that
company is going down. This will lead to a further drop of the value of shares
in the market which in turn will decrease the overall value of the company.

Page No. 26

 EXAMPLE OF SOME PUBLISHED ISSUES

Indian Bank IPO on the anvil-India Business-Business-The Times of

India

India is world's 8th largest IPO market- The Times of India

India Inc's fund raising via IPO in 2008 dips to 3-yr low- The Economic
Time

IPO market to boom in second half- The Economic Time

India Inc raises over Rs 45,000 cr in IPOs, follow-ons in 2007- The

Hindu

Page No. 27

1.4 Hypothesis
PAST/ PRESENT/ FUTURE OF IPO
Indias rapid economic growth, robust corporate profit stability, and a fouryear bull run on Bombays Stock Exchange (BSE), continue to fuel Indias
strong IPO markets. Keen investor interest in Indias strong growth story has
been real acted in the attractive valuations and key price/earnings multiples
garnered by Indian companies, says R. Balanchine, IPO Leader, Strategic
Growth Markets, Ernst & Young India. In 2006, Indias markets launched 78
IPOs and raised US$7.23 billion. Currently, Indias exchanges rank eighth in
the world for numbers of IPOs and value in 2006. Despite a May 2006 market
tumble that erased more than US$100 billion in value in the BSE and sparked
concerns that the four-year Indian stock rally was over, Indian IPO activity
quickly resumed its upward momentum. In 2006, Indias IPO market has been
fairly broad-based, although energy companies dominated with more than 50%
share of funds raised. In 2006, Indias largest IPO was petroleum rife nine
company, Reliance Petroleum, which raised US$1.8 billion, followed by the oil
production and exploration company, Cairn Energy, which raised US$1.3
billion. Real estate IPOs also generated stellar returns for investors.
In the United States, during the dot-com bubble of the late 1990s, many venture
capital driven companies were started, and seeking to cash in on the bull
market, quickly offered IPOs. Usually, stock price spiraled upwards as soon as
Page No. 28

a company went public. Investors sought to get in at the ground-level of the

next potential Microsoft and Netscape.
Initial founders could often become overnight millionaires, and due to generous
stock options, employees could make a great deal of money as well. The
majority of IPOs could be found on the NASDAQ stock exchange, which lists
companies related to computer and information technology. However, in spite
of the large amounts of financial resources made available to relatively young
and untested firms (often in multiple rounds of financing), the vast majority of
them rapidly entered cash crisis. Crisis was particularly likely in the case of
firms where the founding team liquidated a substantial portion of their stake in
the firm at or soon after the IPO (Mudambi and Treichel, 2005).
This phenomenon was not limited to the United States. In Japan, for example, a
similar situation occurred. Some companies were operated in a similar way in
that their only goal was to have an IPO. Some stock exchanges were set up for
those companies, such as Osaka Securities Exchange.
Perhaps the clearest bubbles in the history of hot IPO markets were in 1929,
when closed-end fund IPOs sold at enormous premiums to net asset value, and
in 1989, when closed-end country fund IPOs sold at enormous premiums to net
asset value. What makes these bubbles so clear is the ability to compare market
prices for shares in the closed-end funds to the value of the shares in the funds'
portfolios. When market prices are multiples of the underlying value, bubbles
are likely to be occurring.
Page No. 29

A Brief Note on Future of IPOs in India

The IPO industry in India has received a major boost in the current year
especially with the emergence of Reliance Power IPO on 15th January 2008.
Apart from Reliance Power, another IPO which brought in major capital is
Kishore Biyani-led Future Group's financial services arm. This IPO has been a
recipient of 17.36 crores equity shares as bidding as compared to 6,422,000
equity shares on offer. The public offerings of the IPO of Kishore Biyani-led
Future Group's financial services arm are estimated to rise around Rs. 490
crores future capital. The price range fixed for the Equity shares of this IPO
varies between Rs. 700 to Rs. 765. The subscription for the issue of this IPO
was opened from 11th January 2008 to 16th January 2008. Future of IPOs in
India is quite bright as the Future Capital Holdings in India are expected to rise
up to USD 124 million by the end of 2008. Future Capital, the financial services
arm of the diversified Future Group is expected to divest around 10.16 percent
of its capital which accounts for around 6.4 million shares in the IPO market. In
the year 2007, the IPO market in India has been estimated to raise USD 8.2
billion from 88 IPOs as compared to USD 4.7 billion in the previous year. It
contributed largely in the growth of stock market which rose by 47 percent.
Assuming a major hike in the Indian IPOs, the government has confirmed the
opening of the Oil India IPO by March 2008. The IPO of Oil India Limited has
been reported to raise Rs.1500 crores and will hit the capital market in March
2008.
Page No. 30

 WHAT ARE THE CRITICAL AREAS TO

FOCUS

Compliance with SEBI Guidelines

90% subscription of the issue

Underwriting Agreements

Firm Allotments

Listing approvals from the Stock Exchanges

ROC approval for the prospectus

Advertising and Road Shows

Statutory advertisements

In-time allotments and refunds

Listing of the shares with the Exchanges

SEBI GUIDELINES

Filing of prospectus:

Prospectus to be filed with SEBI through Merchant Banker At least 30 days <
filing with ROC SEBI may suggest changes < 30 days SEBI to consider only
after approval from St.Ex

Issuer is obligated

SEBI is not obligated

Page No. 31

Application for Listing:

No IPO without application for listing

Dematerialization of shares:

Agreement with Depository Present shares also to be in demat public may opt
either physical or demat shares

Qualified Institutional Buyer shall mean:

Public financial institution as defined in section 4A of the
Companies Act, 1956; scheduled commercial banks;

Mutual funds;

Foreign institutional investor registered with SEBI;

Multilateral and bilateral development financial institutions;

Venture capital funds registered with SEBI;

Foreign venture capital investors registered with SEBI;

State industrial development corporations;

Insurance companies registered with the Insurance Regulatory and

Development Authority (IRDA);

Provident funds with minimum corpus of Rs. 25 crores;

Pension funds with minimum corpus of Rs. 25 crores).

Page No. 32

Exemption from Eligibility Norms:

Banking Co. including Pvt. Banks Subject to licensing

by RBI

New Bank being set up on acquisition or take over of

a bank

An

infrastructure

Company, whose

project

is

appraised by F/I, IL & FS and IDFC

IPO Grading:

No IPO unless; (as on the date of filing

the prospectus with ROC):

Grading for IPO has been obtained from

at least one agency

Grading and the rationale have been

included in the prospectus

Grading expenses to be borne by the

issuer

Page No. 33

Present shares to be fully

paid-up:

No IPO, if there are any

shares partly paid up as on the date of IPO

The Shares to be fully paid

up or forfeited

Price Band:

Price Band to be 20%

Max price can be 20% above the floor price

Board of directors may be authorized to fix the price

Denomination of shares

Denomination of the shares is not restricted

In case the issue price is <Rs.500, the Face Value shall be

Rs.10/-

The Face Value may be less, where the issue price is Rs.500
or more

Full disclosure of the face value in offer document

Page No. 34

Guidelines on issue of advertisement:

Advertisement shall be truthful, fair and clear

Shall not contain untrue or misleading or

misleading statement

Disclose all relevant facts

Clear, concise and

Understandable language

Avoid technical, legal, complex terms

No advertisement in Crawlers

Reference to the red-herring prospectus

No slogans, captions or one liners

Shall include risk factors

Risk factors to be given in the same font size

The print size shall not be less than point size 7

1.5 Limitation of the study

More often than not, the pricing of any IPO is what influences the
decision of any investor. The rating agencies, in this case, will not talk about
``what price'' and ``what time'' aspects of the offer. Given that the decision to
Page No. 35

invest or avoid investments in any IPO is most often a function of the pricing,
the lack of this aspect in the present IPO grading system could make the whole
process an unfinished task. Also, rating agencies (experienced in debt rating)
could face trouble with rating the equities, which, unlike debt rating, is more
dynamic and cannot be standardized. Further, IPO grading mechanism is a
globally-unique initiative; it could increase the cost of raising capital in India
and urge companies to seek capital overseas.
Markets, in the short term, can be price-driven and not purely motivated
by company fundamentals. That is to say that, at times, even good companies at
a higher price could be a bad investment choice, while the not-as-good ones
could be a steal at lower prices.
Despite having disclaimers, a higher graded IPO may well tempt small
investors into falsely believing that a high premium would come about on
listing.
Similarly, investors may get deluded by a low-graded IPO, which could
become a `missed opportunity' in the future. The purpose of introducing
grading, thus, might get defeated if it leads to a false sense of buoyancy or
alarm among investors.
Till such time the utility of the IPO grading system is unraveled, it is
advisable for investors to use the grades only as an additional input to make an
informed decision. Investors need to be convinced about the business potential,
pricing and valuations of an IPO, together with the grading, to make a final
choice.

Page No. 36

Page No. 37

2.1 SOURCE OF DATA

Datas are the useful information or any forms of document designed in a
systematic and standardize manner which are used for some further
proceedings. One of the important tools for conducting marketing research is
the availability of necessary and useful data. Sometime the data are available
readily in one form or the other and some time the data are collected afresh. The
sources of Data fall under one category Secondary Sources.

Secondary Data- the secondary data was collected through the following:
Online Research material of the Various Financial Institution directly or
indirectly involved with IPO, Secondary Data used in External Source of
Information Like internet, magazine, paper cutting.

Page No. 38

2.2 OTHER SOURCE

Information Sources

Information has been sourced from namely, books, newspapers, trade

journals, and white papers, industry portals, government agencies, trade
associations, monitoring industry news and developments, and through
access to access to more than 3000 paid databases.

Analysis Method

The analysis methods include the following: Ratio Analysis, Historical

Trend Analysis, Linear Regression Analysis using software tools,
Judgmental Forecasting and Cause and Effect Analysis etc.

Page No. 39

Page No. 40

3.1 GLOBAL IPO MARKET

Accelerated globalization of capital continues to drive the record-setting
world IPO markets of 20062007. Around the world, companies, investors, and
stock exchanges think and act much more globally, often looking outside
domestic

markets

for

high

growth

opportunities.

In

the

past 18 months, key

IPO trends refl ect the
effects of globalization:
flourishing
markets

stock
awash

liquidity,

in

vibrant

growth in the emerging

markets,
rivalry

escalating
between

the

worlds stock exchanges, the rise of more world-class financial centers, the
boom in large listings on local exchanges, and the proliferation of capitalraising options, especially private equitys emergence as a key player behind so
many large IPOs. In 2007, globalizing capital and a surge in IPO ready
companies worldwide are broadening the horizons of the worlds financial
markets

GREATER CHINA

KEY TRENDS:
Greater Chinas IPO markets launched megaIPOs in 2006,
with larger (but no longer super-sized) IPOs in 2007.

Page No. 41

 HKSE led world exchanges in fundraising in 2006, and

showcasing its world-class liquidity and corporate governance
standards.
As global resources migrate to China, foreign investors grow
more comfortable investing locally, especially in state-owned
enterprises.
A dual-listing trend and budding rivalry emerges for the Hong
Kong and Shanghai stock exchanges.
Many large Chinese companies offer shares to US institutional
investors under Rule 144A.
Driven by yet another year of rapid economic growth and robust
secondary markets in 2006, Greater Chinas IPO market soared to an all-time
high, with US$56.6 billion raised in 175 offerings. With conspicuous success,
the Hong Kong Stock Exchange (HKSE) hosted privatizations of Chinas two
largest state-owned banks including the worlds largest IPO ever, the
Industrial and Commercial Bank of China (ICBC) with US$21.9 billion raised,
and the second largest offering, Bank of China (BOC) which raised US$11
billion. The ICBC issuance was also the first time in China that shares were
dual-listed.

INDIA
KEY TRENDS:
The strength of Indias economy, stock market, corporate profits, energy
sector, and private equity fuel IPOs in 2006 and 2007.
Indian exchanges hosted several billion-dollar IPOs in 2006, all prime
examples of the rise in localization.
Cross border activity and the role of foreign capital continue to grow.
Page No. 42

 Enabling relatively easy access to global institutional capital, Qualified

Institutional Placements (QIPs) gain immediate popularity.
The private equity rush into India has lead to a potential for many IPO
exits.

EUROPE
KEY TRENDS:

Europes IPO markets rose to an all-time high in 2006, and remain highfl years in

2007 bolstered by beefy deals, cross-border listings in London, and

private equity.

As the regions high-growth story, Russia drives European IPO activity.

London has become the top listings destination for cross-border issuers
seeking relatively quick and easy capital.

Page No. 43

Europes junior exchanges, including Londons AIM, the Eurocents

AlterNet, and Deutsche Broses Entry Standard, are thriving with smallcap activity.

The ballooning growth in European private equity is leading to more IPO

exits, and sizeable public-to-private transactions.

Europes steady economic expansion, attractive stock prices relative to US

peers, low interest rates, and vigorous secondary stock markets galvanized its
IPO markets in 2006 and 2007. For the second year in a row, Europes
exchanges attracted the most cross-border listings, especially Russian
companies listing in London. Another key source of capital in Europe has been
the large private equity firms.

MIDDLE EAST

KEY TRENDS:

After three years of record growth, most Middle East markets endured
erratic performance in 2006, but seem to be steadier in 2007.

Factors leading to Middle East volatility include excess liquidity,

irrational retail speculation and lack of market depth.

The Middle East IPO pipeline is expected to expand, with large-scale

privatizations and infrastructural projects in the works.

Page No. 44

CIS/RUSSIA

KEY TRENDS:

Russian IPO markets fl ourish in 2006 and 2007, particularly

in the commodities and fi nancial services sectors.

Larger Russian companies seek credibility and deeper

liquidity by listing in London.

Russian companies face uncertainty ahead with 2008

presidential elections, commodity prices, and corporate governance issues.

A GDR in London combined with a US Rule 144A offering

is the most popular form of listing.

As the private equity market remains undeveloped, IPOs are

by far the most popular Russian exit strategy, with the best valuations.

Page No. 45

Kazakhstan launches large IPOs in resources and banking

sectors with several major banks expected to go public in 2007.

AUSTRALIA

KEY TRENDS:

Rising commodity prices and demand from

Asia fuel thriving resources and energy sectors.

A recent surge in private equity will lead to

many IPO exits in next 1224 months.

As Australian stock markets rise for the fourth year in a row, Australias stable
economy, record corporate profi ts and booming resources sector have led to an
extraordinarily active IPO market. In 2006, Australia launched 173 IPOs,
raising US$4.2 billion, with many listings in the resources and energy sector.
The largest Australian IPO of 2006 was explosives maker Dyno Nobel worth
US$800 million.

Page No. 46

 UNITED STATES
KEY TRENDS:

Robust US markets garner the

highest number of IPOs in 2006 and maintain momentum with a pipeline
of high-quality deals in 2007.

Most global companies list at

home, rather than in the US, as local markets grow more liquid and better
regulated.

In the past 18 months, the vitality of the US stock market has whet investor
appetite for risk, and spurred US-domiciled IPO numbers to record heights.
Although some market watchers blame US regulations for the rise in non-US
cross-border issuances, globalization of capital may be the primary force behind
the trend as it has lead to stronger, more liquid, competitive markets worldwide.
For a truly global company, a US listing is still seen as the gold standard with
access to the deepest pool of capital, a valuation premium, and
strategic advant

Page No. 47

ages.

3.2 UPCOMING IPO IN THE MARKET

Upcoming Initial Public Offering (IPOs) in India at a glance:
Initial Public Offer (IPO) in India, means the first sale by a private company of
its shares to the public. Initial Public Offers (IPOs) in India, are usually issued
by small companies but at the same time big private companies also go public
by issuing their shares.
The Upcoming IPOs in India are being issued by those private companies that
want to sell their shares in the country's capital markets. Many companies are
planning to launch their IPOs in the financial year 2009-2009.

Various companies issuing upcoming IPOs in India as on 3rd

December, 2008 are:

UTI Asset Management Company Ltd whose lead manager is Sbicap

Securities Ltd.

Madhana Industries Ltd whose lead manager is Edelweiss Securities Ltd.

Pipavav Shipyard Ltd whose lead manager is Citigroup Global Markets

India Pvt. Ltd.

Mahindra Holidays & Resorts India Ltd whose lead manager is HSBC
Securities And Capital Markets India Pvt. Ltd.

Page No. 48

Gammon Infrastructure Projects Ltd whose lead manager is Sharekhan

Ltd.

Resurgere Mines & Minerals India Ltd whose lead manager is Motilal
Oswal Securities Ltd.

National Hydroelectric Power Corporation Ltd whose lead manager is

Enam Securities Pvt. Ltd.

Kiridyes and Chemicals Ltd whose lead manager is Centrum Capital Ltd.

Neel Metal Products Ltd whose lead manager is ICICI Securities Ltd.

Jhaveri Flexo India Ltd whose lead manager is SREI Capital Markets Ltd.

Gokul Refoils And Solvent Ltd whose lead manager is Intensive Fiscal
Services Pvt. Ltd.

Pride Hotels Ltd. whose lead manager is Edelweiss Securities Ltd.

Oil India Ltd. whose lead manager is Citigroup Global Markets India Pvt,
Ltd.

Man Infraconstruction Ltd. whose lead manager is Kotak Mahindra Capital

Company Ltd.

Oswal Wollen Mills Ltd. whose lead manager is UTI Bank Ltd.

TCG Life sciences whose lead manager is Enam Securities Pvt. Ltd.

Uma Precision Ltd. whose lead manager is Karvy Stock Broking Ltd.

Future Ventures India Ltd. whose lead manager is Enam Securities Ltd.

Alkali Metals Ltd. whose lead manager is Religare Securities Ltd.

Page No. 49

Multi Commodity Exchange India Ltd. whose lead manager is JM Morgan

Stanley Financial Services Pvt. Ltd.

Cox & Kings (India) Ltd. whose lead manager is Enam Securities Ltd.

Jaiprakash Power Ventures Ltd whose lead manager is Enam Securities

Ltd.

Aishwarya Telecom Ltd. whose lead manager is SREI Capital Markets Ltd.

ACME Tele Power Ltd. whose lead manager is Kotak Securities Ltd.

RNS Infrastructure Ltd. whose lead manager is ICICI Securities Ltd.

Midvalley Entertainment Ltd. whose lead manager is Religare Securities

Ltd.

Ramsarup Lohh Udyog Ltd. whose lead manager is Microsec Capital Ltd.

Edserv Soft at 20% lower circuit, witnesses 45 bulk deals

Bharat Oman Refineries defers IPO

Edserv witnesses 188 bulk deals, India Max sells 4 lk shrs

Edserv IPO: Will 50% allotment to QIBs affect stock ahead?

See FY09, FY10 EPS at Rs 15/sh: Edserv Softsystems

EdServ Softsystems ends with 129% premium

EdServ Softsystems lists at issue price of Rs 60

EdServ Softsystems to list on March 2

Crisil finds weak corporate governance structure in IPO cos

BSNL\'s IPO plans still on cards: Scindia

ING Vysya pays Rs 4 lakh to settle IPO case

Page No. 50

Page No. 51

4.1 LATEST NEWS IN IPO SECTOR

The IPO market in India has been growing at a massive pace for the past
few years. With the advent of some leading IPOs in India, the country has
become the largest IPO market across the globe so far. India has saved almost
USD 3.3 billion proceeds in the global IPO market from eight deals of late. As
has been estimated by Thomson Financial, the biggest contributor to these deals
has been the USD 3 billion IPO of Reliance Power. The second largest IPO in
India is Emaar MGF which is a USD 1.6 billion IPO. Emaar MGF has revised
the price range for the Equity shares. Initially it was Rs 540-630 per share
which now costs Rs 530-630 per share. A report by Thomson Financial states
that India has occupied 49.1 percent of the global IPO proceeds in the current
year 2008 as compared to 3.7 percent in the year 2007. The global IPO market
has deteriorated by 36.1 percent during the past one year.

HCC defers plans to launch IPO of Lavasa Corporation

Construction major HCC's group company Lavasa Corporation, which is

developing an ambitious Rs 30,000-crore hill city project here, has deferred its
plan to launch an initial public offer due to global economic slowdown.

Page No. 52

Bharat Oman Refineries defers plans to raise funds through

IPO

The Bharat Petroleum Corporation-promoted Bharat Oman Refineries has

deferred its earlier plans to raise funds through an initial public offer, due to
adverse market conditions.

ONGC mulls IPO for Rs 12,440 cr plant, gives 19% stake to

GAIL

ONGC is planning an initial public offering of its subsidiary, which is building

Rs 12,440 crore petrochemical plant at Dahej in 2011, even as it agreed to give
state gas utility GAIL India a 19 per cent stake in the mega project.

Tata Cap issue over subscribed 6 times; huge investor response

Public issue of Tata Group firm Tata Capital got subscribed over six times of
the offer, receiving bids worth over Rs 3,000 crore, driven by robust response
from all categories of investors.

Governances weak in 50% of IPOs: Crisil

Corporate governance standards were weak in almost 50% of the 29 initial

public offerings (IPOs) graded by Crisil since May 2007, the rating agency said
in a release on Thursday.

Corporate governance may weigh more in future IPO gradings

Page No. 53

Ratings agencies are likely to increasingly look at corporate governance as a

key aspect of gradings in initial public offers (IPO) in the future.

Government plans divestment in five PSUs via IPOs

Government is planning to list at least PSUs in the stock markets after a similar
effort last year had to be shelved at the last moment when the stock markets
tanked following the global financial meltdown.

4.2 MAJOR PLAYER OF IPO IN INDIA

Some of the leading IPOs in India include Reliance Power Limited IPO,
Tulsi Extrusions Limited IPO, Onmobile Global Limited IPO, EMAAR MGF
IPO, Future Capital Holdings Limited IPO and many more. All these IPOs have
opened their subscriptions in 2008. India has saved almost 3.3 billion proceeds
in the global IPO market through eight deals which has made it the largest IPO
market across the globe. Reliance Power IPO has been the biggest contributor
in this regard
The Initial Public Offering (IPO) is defined as the first set of stocks that are sold
out by a company to the public in order to seek an expansion of the capital. The
IPO is usually set up by the smaller or newly emerging companies but the largescale companies also go for it in order to become publicly traded. The issuer is
faced with important considerations like the security of the issue, price band
offered for the same and the time for sale. It is a risky affair for any individual
Page No. 54

investor as he or she does not have any clue regarding the performance of the
shares on the first day of sale.

Top Companies: An analysis

Reliance Power IPO has been issued by
Reliance Power Limited. Reliance Power IPO
was issued on 15th January, 2008 and closed on 18th January, 2008. Reliance
Power Limited Company is planning to generate capital worth Rs. 11, 700
crores through the IPO. This makes it the largest IPO in the country as on 17th
January, 2008. The price band of the equity shares of Reliance Power IPO has
been fixed at Rs. 405- 450 per equity share.
The total size of Reliance Power IPO is around 26 crores equity shares.
Reliance Power IPO will be listed on the National Stock Exchange (NSE) and
also on the Bombay Stock Exchange (BSE). The lead bankers of Reliance
Power IPO are Enam Securities, Kotak Mahindra Capital Co, ABN Amro
Rothschild, ICICI Securities, JP Morgan Chase & Co, UBS AG and Deutsche
Bank AG.
The main objective of Reliance Power IPO is that the proceeds from the issue
will be used to fund the power generation projects that the company plans to
carry out.

Page No. 55

BGR Energy System (India) Ltd. was incorporated in 1985.

BGR Energy System (India) Ltd. is engaged in the business of
producing and selling different kinds of equipments, services and systems for
power, refinery, gas & oil, and petrochemical industries .BGR Energy IPO was
issued on 5th December, 2007 and closed on 12th December, 2007. The total
size of BGR Energy IPO is 9,136,000 equity shares of Rs. 10 each. Out of the
total number of equity shares around 500,000 has been reserved for the
employees of the company and about 8,636,000 have been issued to the public.
The price band of BGR Energy IPO has been fixed between Rs. 425 and Rs.
480.
BGR Energy IPO was listed on the National Stock Exchange (NSE) and also on
the Bombay Stock Exchange (BSE). The registrar of BGR Energy IPO was
Intime Spectrum Registry Ltd. The lead managers of BGR Energy IPO were
CLSA India, SBI Capital Markets, UBS Securities India, and Kotak Mahindra
Capital. The minimum order quantity for BGR Energy IPO was fourteen shares.
The maximum amount for subscription in BGR Energy IPO for the retail
investor was Rs. 100,000.

Page No. 56

The Cinemax India IPO was launched in the

year 2006, for the purpose of expanding the
company and setting up theater screens in different locations.
The Cinemax India IPO was launched with the purpose of utilizing the funds
for meeting the requirements of the capital expenditure of establishing 19 new
theater screens throughout the country, at an estimated cost of Rs 110.69 crores.
The proceeds from the IPO would also be used for the general corporate
purposes which include acquisitions.Cinemax India has filed its red herring
prospectus with the Securities and Exchange Board of India (SEBI).
Some the places where the Cinemax India is planning to set up theaters are
Kolkata, Pune, Guwahati, Nasik, Panipat, Hyderabad, Ahmedabad, Siliguri,
Bangalore, Indore, Nagpur, Faridabad, Ghaziabad, Ludhiana and Mumbai.
Cinemax India is one of the leading exhibition theater chains in India. It is
operating in several locations throughout the country. All together in the year
2006 it had 33 screens in 10 different locations. Cinemax India is a part of the
Kanakia Group. In the year 2006, the total annual income was Rs 438.60
million and the net profit was Rs 67.64 million.

Page No. 57

ICICI Bank IPO was launched on June 18,

2007 a week after the opening of the DLF IPO.
ICICI Bank raised Rs. 10,000 crores from investors from its Initial Public
Offerings (IPO). ICICI Bank's domestic issue is part of a USD 5 billion capital
raising program. ICICI IPO offered discount rates to its retail investors. The
subscriptions of ICICI IPO closed on 22nd June 2007. One of the chief focuses
of ICICI IPO was to generate interest among the retail investors keeping in
view the prevailing market price of around Rs. 903. The ICICI Bank IPO has
reportedly crossed the expected subscription amount by 10.5 times. The public
offerings of the bank were subscribed by 11.5 times.
ICICI Bank has planned up to elevate another USD 2.5 billion from the issue of
American Depository Receipts. ICICI Bank has also decided to raise money by
selling off the shares of its investment company for insurance business. This
selling off of shares of the investment company of ICICI Bank will be cleared
by RBI and IRDA. In 2007, ICICI Bank has got the approval from the Foreign
Investment Promotion Board (FIPB) to sell up to 24 percent equity in the ICICI
investment company. The international investors will be endowed with 5
percent equity from ICICI Bank. The bank has also decided for a shifting of its
assets in other subsidiaries namely ICICI Prudential Life Insurance, ICICI
Lombard General Insurance and ICICI Prudential Asset Management.

Page No. 58

Indian Bank was established on 15th August

1907 as a part of the Swadeshi Movement in
India. Indian Bank IPO was issued in February 2007, almost 100 years after the
bank was established. The issue of Indian Bank IPO was opened on 5th
February, 2007 and closed on 9th February 2007. The size of the Initial Public
Offering (IPO) of Indian Bank was 85,950,000 equity shares. It was done
through 100 percent book building and had a face value of Rs.10. The retail
segment was given 23,206,500. The price range varied from Rs.77 to Rs.91 and
the tick size was Re.1. The minimum number of shares to be purchased was
kept at 75. The retail investors were given the maximum subscription amount of
Rs.100,000. The total size of Indian Bank IPO was estimated to be around
Rs.782 crores.

Objectives of Indian Bank IPO

To fulfill the capital requirements for implementation of Base II standard.

To provide capital adequacy for it's loan and investment portfolio section.

To provide finance for developing business infrastructure.

Indian Bank has more than 22,000 employees. The Indian Bank has 1411
branches spread all across the country. Indian Bank offers diversified banking
services and has three subsidiary companies. The foreign branches of Indian
Bank are set up in Singapore and Colombo

Page No. 59

Kingfisher till date has not launched any IPO, but

has expressed its wish to launch one soon. This
IPO would be used to fund its aggressive
expansion plans in India. The accumulated corpus would be utilized to fund its
airline business and to payoff debt for its acquired liquor company Shaw
Wallace & Company.
The brand Kingfisher is being owned by the business conglomerate United
Breweries Group. The brand is being used for two business entities - Airlines
and Alcoholic Beverage. The Airlines operates under the name of "Kingfisher
Airlines" and the alcoholic beverage segment manufactures "Beer" and
"Mineral Water" under the same brand name. Till now the company has not
launched any IPO to fund its aggressive expansion plans, but plans to launch it
in near future to raise capital. Dr Vijay Mallya is the Chairman and CEO of
both the segments. The Chief of the United Breweries Holding Ltd (UBHL), Mr
Vijay Mallaya, said that the group would come up with an Initial Public
Offering in 2008 and would raise a total corpus of US$ 400 million. The Initial
Public Offering of the Kingfisher Airlines would target a corpus of US$ 200
million and the rest would be raised through the IPO of the liquor
business.Kingfisher Airline IPO, to be issued for the first time in the year 2008,
to finance the airline's expansion and funding of A380s air fleet.

Page No. 60

KNR Constructions Ltd. IPO has been issued by

the company in order to fulfill various objectives
such as to meet the company's requirement for working capital and to purchase
equipments.KNR Constructions Ltd. was incorporated in 1995 and the
company is engaged in the business of infrastructure project development. The
company provides services of construction, engineering and procurement for
various sectors like irrigation, highways & roads, and management of the
infrastructure of urban water. As on 30th June 2007, KNR Constructions Ltd.
had around twenty four projects in the various states of India that included
Assam, Tamil Nadu, Uttar Pradesh, Karnataka, Andhra Pradesh and Madhya
Pradesh.
The issue of KNR Constructions Ltd. IPO was opened on 24th January and
closed on 29th January, 2008. The total number of shares issued by KNR
Constructions Ltd for its KNR Constructions Ltd. IPO is 7,874,570 equity
shares at the face value of about Rs. 10 each. The company plans to raise
through KNR Constructions Ltd. IPO around Rs. 142 crores from the Indian
capital market. KNR Constructions Ltd. IPO has been listed on the National
Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The lead manager
of KNR Constructions Ltd. IPO is Axis Bank Limited. The registrar of KNR
Constructions Ltd. IPO is Intime Spectrum Registry Limited.

Page No. 61

Page No. 62

Manjushree Extrusions Ltd IPO was

issued on 31st January, 2008 and it closed
on 6th February, 2008. The various objectives of issuing Manjushree Extrusions
Ltd IPO by the company were to use the proceeds to expand the operations of
the company and also to meet the requirement of the working capital.
The lead manager of Manjushree Extrusions Ltd IPO was Centrum Capital
Limited. The registrar of Manjushree Extrusions Ltd IPO was Alpha Systems
Private Limited and it was listed on the Bombay Stock Exchange (BSE). The
total size of the equity share of Manjushree Extrusions Ltd IPO was around Rs.
23.07 crores. The face value of per equity share of Manjushree Extrusions Ltd
IPO was Rs. 10. The maximum amount of subscription by the retail investor
was around Rs. 100,000 in Manjushree Extrusions Ltd IPO. Manjushree
Extrusions Ltd was incorporated on November 13th, 1987 and it is engaged in
the production of plastic packaging items like containers and jars. Manjushree
Extrusions Ltd manufactures products for multinational companies in various
sectors like food processing, pharmaceutical, agrochemicals and FMCG. The
net profit of Manjushree Extrusions Ltd came to Rs. 112.42 lacs in 2004- 2005.
In 2005- 2006 this figure stood at Rs. 137.11 lacs and in the following year,
2006-2007, this figure increased to Rs. 282.32 lacs.

Page No. 63

The Maruti IPO has set a price range of Rs. 125 per share
above the Floor price of Rs. 115. The subscription for Maruti
IPO opened on June 12, 2003 and closed on June 19, 2003. The
response to Maruti IPO was overwhelming within the subscription period,
which led to an over-subscription of the public offerings of Maruti by more than
ten times.
The government decided to shell out 85 percent shares of IPO to the noninstitutional investors and 15 percent shares to the non-institutional high networth individuals. Consequently, government would get Rs.993 crores for 7.94
crores shares. But SEBI recommended that 60 percent can be given to the
institutional investors but at least 40 percent should be allotted for the retail
investors as well. The government has allotted 60 percent shares to the retail
investors and 40 percent shares to the institutional investors. The shares were
allotted to the individuals on a pro rata basis. The IPO of Maruti is claimed to
be one of the biggest capital market transactions in recent years in India and
also the largest Book Built IPO that has been implanted in India till date. Maruti
IPO received more than 300,000 applications which is a record in the history of
IPO in India. The majority of applicants to these comprise of the Indian retail
investors. They received the allotments on the basis of the price range already
fixed by the government. A huge number of institutional investors also paid a
lot of importance in investing in Maruti.
Page No. 64

The subscription of Power Grid Corporation of India

IPO was opened from 10th September 2007 to 13th
September 2007. The price range of Power Grid Corporation
of India IPO was between Rs. 44 and Rs. 52. The proceeds
from Power Grid Corporation IPO were submitted to the National Investment
Fund (NIF). Citigroup, Kotak and Enam were the lead managers for the Power
Grid Corporation IPO. Karvy Computershare private limited was the registrar
for the Power Grid Corporation IPO.
In the year 2006, Power Grid Corporation of India Limited (PGCIL) reported a
28 percent jump in the net profit which amounted to Rs 1,009 crores. The
company launched their IPO in 2007 and the subscription was opened from
10th September 2007 to 13th September 2007. The shares of the IPO of Power
Grid Corporation of India had a price range of Rs. 44 to Rs. 52 per share. The
funds raised from Power Grid Corporation IPO were submitted to the National
Investment Fund (NIF). The lead managers of the IPO of Power Grid
Corporation include Kotak, Citigroup and Enam. Power Grid Corporation of
India (PGCIL) raised a capital of Rs 6,000 crores through the IPO. The
proceeds from the IPO will be used to set up branches in almost 12 countries
across the globe. A unit will be set up in China in order to provide consultancy
services, accomplish several projects and operate transmission lines and grid
network..
Page No. 65

The Reliance Petroleum IPO was launched by

Reliance Petroleum Limited, the petrochemical
segment

of

the

legendary

Indian

business

conglomerate, Reliance Industries Limited. The Mukesh Ambani led Reliance

Petroleum Limited plans to expand its present petrochemical business. The
price band for the Reliance Petroleum IPO was fixed between Rs 57 and Rs 62
per equity share and it raised Rs 6,000 crores.
The main purpose of launching the Reliance Petroleum IPO was to fund its
refinery project, which would be operational by the end of 2008. This refinery
project of Reliance Petroleum would be an export oriented oil refinery in the
special economic zone, annexed to its Jamnagar refinery in Gujarat. The said
refinery would have a capacity of 580,000 barrels of crude oil per day. Further,
it would also utilize a part of the accumulated fund for the setting-up of a
polypropylene plant which would have a production capacity of 900,000 tons
per annum. The Reliance Petroleum IPO was launched on 13th April 2006 and
the bidding was closed on 20th April. The price band for the Reliance
Petroleum IPO was fixed between Rs 57 and Rs 62 per equity share. This Initial
Public Offering of the Reliance Petroleum raised Rs 6,000 crores. The Reliance
Petroleum IPO issued 45 crores equity shares and raised Rs 2,790 crores at the
upper end of the price band. The Reliance Petroleum IPO was very popular
amongst retail investors, Petroleum IPO.
Page No. 66

Techpro Systems IPO will be issued by Techpro Systems

(TSL) which is engaged in taking up turnkey projects in
the systems of bulk material handling. The total size of the
issue of Techpro Systems IPO will be around Rs. 250 crores approximately.
Techpro Systems IPO will be launched by the company Techpro Systems (TSL)
and the total size of the issue will be worth about Rs. 250 crores approximately.
Techpro Systems (TSL) plans to enter the Indian capital market with its Techpro
Systems IPO which will be a book built issue.
Techpro Systems IPO will consist of 7,300,000 equity shares and it will
comprise of around 22.33% of the paid- up post issue capital of Techpro
Systems (TSL). The company has filed with SEBI its Draft Red Herring
Prospectus in order to issue Techpro Systems IPO. The lead arrangers of
Techpro Systems IPO are SBI and Kotak. Techpro Systems IPO is expected to
be issued in the last week of January, 2008. Techpro Systems IPO will ensure
that the company will have enough funds to take up developmental work and
also to expand its operations.
Techpro Systems (TSL) is engaged in undertaking projects of turnkey in
systems bulk material handling that includes handling raw material systems for
cement plants, power, and steel. Techpro Systems (TSL) manufactures various
equipments like feeders, crushers, and screens and it also sets up conveyor
systems.
Page No. 67

Page No. 68

5.1 MAJOR FINDINGS

It can be observed that out of 24 companies, only 10 companies have

given positive returns on the date of listing.

Out of 24 companies observed, 9 companies have given positive returns

for 1 month.

As far as 3 months & 6 months returns are concerned, 15 companies have

given positive returns.

Only 10 companies were able to perform positive returns at the end of 1

year.

Market return indicates that, 11 companies had given positive return for 1
month.

months Market rate of return was positive for 21 companies.

Market return was positive for 6 months for all 24 companies.

For 1 year, all 24 companies were able to give positive returns.

Only 5 companies were able to give positive returns for all the periods.

If date of listing is concerned then, ICRA Ltd offered highest rate of

return at 143.41%.

Highest rate of return was offered by ICRA Ltd. For one month and 3
months at 184.27% and 214.22%.
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For 6 months and 1 year, Orbit Corporation Ltd. Gave highest return i.e.
464.41% and 289.41%.

S.D. was lowest for Oriental Trimex Limited at 2.14, 1.62, 2.55, 3.88 for
all the periods indicating that it is less riskier than other.

S.D. was highest for Autoline Industries Limited at 56.7 indicating that it
is the riskiest than any other security for 1 month.

For 3 months, Advanta India Limited has the highest S.D. at 93.44

For 6 months, Orbit Corporation Limited was riskiest than any other scrip
at 131.39

For 1 year, Orbit Corporation Limited had highest S.D. at 225.71%.

Also, Orbit Corporation Limited has offered highest return for 6 month
and 1 year.

5.2 Conclusion
IPO is used by a company to raise its funds. The extra amount obtained from
public may be invested in the development o f the company, although it costs a
little to a company but it gives a way to get more money for long term
investments.

Page No. 70

 Cliff, M.T.; Denis, D.J. (2004), Do Initial Public Offering Firms

Purchase Analysts Coverage with Underpricing?, The Journal of
Finance, Vol. 59, No. 6, December, pp. 28712901.
Derrien, Francois (2005), IPO Pricing in Hot Market ConditionsWho
Leaves Money on the Table, The Journal of Finance, Vol. 60, No. 1,
February, pp. 487521.
Tinic, S.M. (1988), Anatomy of Initial Public Offering of Common
Stocks, Journal of Finance, Vol. 43, No. 4, pp. 789822.
Shah, A. (1995), The Indian IPO Market: Empirical Facts, Centre for
Monitoring Indian Economy, Mumbai, May

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http://www.reliancemoney.com

http://en.wikipedia.org
http://finance.indiamart.com/india_business_information/sebi_investors_kno

whow.html

http://www.hinduonnet.com/2003/03/26/stories/2003032604291800.htm
http://demataccount.com/2008/01/15/learning-basic-concepts-of-ipo-india/

http://www.sebi.gov.in

Special Thanks to:

Wikipedia, the free encyclopedia.htm

http://www.google.com

http://www.economywatch.com/business-and-financial/IPO-industry

http://www.fibre2fashion.com/IPO-article

Grading of IPOs- The Hindu Business Line

Biggest IPO in Indias -Capital market History Business management

article Business News Newswire

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Global_IPO_Trends_2007 -Report by Ernst & Young India -

IPO, IPOs India News Market News - Economic Times

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